Business consolidation is a bad sign

Hello. Dr. Keith Smith with you – Surgery Center of Oklahoma. Thank you for joining me in this series.

My friend, Jim Epstein, of Reason Magazine, told me when he was here doing his mini-documentary on our facility, that one of the characteristics he looked for in the news or in events that led him to believe that a good juicy story was right around the corner was business consolidation.

Business consolidation is not the natural order of things. Businesses typically proliferate. There are usually more competitors that come into a marketplace to compete with, replace, or improve upon those who are already present in the marketplace.

Whenever you see the number of businesses contract – say from 25 to 4 – that typically means that the hand behind the veil of bribery and government corruption is typically at work.

Jim has found this to be the case and looks for business consolidation whenever he wants to find a really juicy, corrupt, bribery-ridden story behind the veil. Healthcare, of course, is full of this and consolidation is the rule. There are fewer and fewer surgery centers. There are fewer and fewer hospitals systems. There are fewer and fewer insurance carriers.

All of this is the result of the intervention of government. Government takes money from folks and grants favors and oftentimes issues regulations that crush the young, upstart underdogs. All the while, the big corporate players are bemoaning this new regulation, claiming it’s going to cost them so much money, but they are celebrating secretly, popping champagne corks, knowing they have fewer competitors in the marketplace and a near-monopoly approaches with all of the goodies that these cronies anticipate from this action.

I tell you this because I read often that people in the United States think that new regulations are needed, that government needs to issue new regulations to prevent abuses in healthcare. These new regulations oftentimes, I would argue, are written by the very companies that many people think are the source of these abuses. And the regulations that typically come out of Washington regarding healthcare just serve to achieve consolidation that benefits big companies that, in front of the camera, tell you how awful these regulations are.

I wanted to pass this on because I think there’s some confusion about the true purpose of many of the regulations that come to us from government. And I wanted to give my friend Jim Epstein credit for this. Look for business consolidation. Look for it everywhere, in the paper, wherever. If you see the number of businesses, insurance companies, hospital systems, whatever business… if you see that beginning to contract, you will know that someone is paying very handsomely for all of the advantages that this new monopoly will confer on them.